Construction tech could add $25 billion to Australia’s economy

According to the report, startups are not looking to disrupt tier one construction firms — very high capital costs mean that established industry players remain firmly in position. Instead, startups are looking to provide digital solutions and technological additions that help improve existing businesses and overcome some of the most enduring challenges of this complex sector. The report finds emerging trends and technologies in the space included building information modelling (BIM), 3D printing, smart buildings and even robotic bricklaying. Using these types of tech solutions to equip the traditional construction sector could potentially add $25 billion in value to Australia’s economy year-on-year within the next decade.

Startups, therefore, have the potential to add huge value to the local construction sector as well as enjoying healthy global demand for exported technology solutions. Larger firms are themselves proactively exploring how to change. Both the workforce and management are keen to move away from burdensome paper-based administration towards integrated digital solutions.

This is not to say it will be easy. Construction already operates with some of the thinnest profit margins of any industry, and firms have large and complex legacy systems. Change management requires significant time and investment, and is hampered by the project-based nature of siloed operations. Construction sectors the world over are grappling with these challenges, and construction remains one of the least ‘innovation active’ sectors globally.

However, when set against a backdrop of a global construction output valued at over US$8 trillion in 2015 and forecast to grow to US$15.5 trillion by 2030, it’s clear that the stakes are high.

Looking at our own shores, the Australian construction sector is the largest non-services sector of the economy, accounting for 8.1% of GDP. Construction employs 1.1 million Australians – more than five times as many as the mining industry. A further 100,000 jobs are projected to be added by the sector over the five years to 2022, with employment growth forecast at 10.9%.

Recent years have seen a decline in mining-related engineering construction expenditure and increased focus on civil engineering projects. Significant projects in transport and road infrastructure development are under way, including the Melbourne Metro Tunnel upgrade, the Sydney Light Rail expansion, the Melbourne level crossings removal project, and upgrades to the Princes Highway, which have helped to stabilise the output figure for construction revenue.

Australian construction tech going from strength-to-strength

Australia has seen strong growth in the construction tech space, with startups like SafetyCulture and Assignar attracting venture capital from leading Australia-based venture funds including Blackbird and Our Innovation Fund, alongside Silicon Valley titans Index Ventures.

StartupAUS estimates Australian construction tech startups have attracted at least $98 million in investment since the start of 2016. With over 75% of these deals at an early stage (‘seed’ or ‘A’), this figure has the potential to rise sharply in coming years.

Sydney-based Assignar, is a cloud based platform built to help construction contractors improve efficiency, workplace safety, and project profitability by providing control of their workforce, assets, sub-contractors and compliance.

“Before we started Assignar in 2011, we saw many general contractors and subcontractors struggling with their technology suite; trying to tie point-solutions together or using a platform that wasn’t specifically designed with the Construction industry in mind. With Assignar we aim to be the so called one-stop-shop for general contractors and subcontractors,” said Assignar CEO, Sean McCreanor.

Assignar counts companies like UGL, Lendlease, Sydney Trains and Liebherr among their significant and fast growing client list in both Australia and the United States. The startup’s recent $3 million capital raise will be used to attract more contractors to the platform, and developing the product to become the international industry standard.

Australia a leading adopter of technology

Australia also enjoys some significant advantages in this space when it comes to the adoption of new technologies. Australia’s construction sector is heavily concentrated, with just 20 firms accounting for 68% of contracts won. Anecdotal evidence also suggests Australia’s construction sector has been a leading adopter of technology for some time — most notably in cloud software, use of mobile products for field processes and in adoption of BIM.

With the right action, Australia can capitalise on its burgeoning construction tech ecosystem and drive value throughout the sector and the economy as a whole.